Question

As of January 1, 2011 a Mortgage Loan Originator License Endorsement must be obtained before a real estate licensee can solicit or originate a loan application, or negotiate or offer to negotiate any residential mortgage loans in accordance with the:

a. Federal Mortgage Loan Originator Licensing System (NMLS)
b. Dodd-Frank Wall Street Reform and Consumer Protection Act
c. State Department of Housing and Urban Development (HUD) regulations
d. SAFE Act

Answer 1

A Mortgage Loan Originator License Endorsement is required in accordance with the SAFE Act, to ensure standards in the mortgage industry post the subprime mortgage crisis.

Step-by-step explanation:

As of January 1, 2011, a Mortgage Loan Originator License Endorsement must be obtained before a real estate licensee can solicit or originate a loan application, or negotiate or offer to negotiate any residential mortgage loans. This regulation is in accordance with the SAFE Act (Secure and Fair Enforcement for Mortgage Licensing Act).

The SAFE Act was implemented in the wake of the subprime mortgage crisis, which exposed inadequacies in the residential mortgage lending and origination process. The act requires loan originators to be registered and licensed through the Nationwide Mortgage Licensing System & Registry (NMLS). The introduction of such occupational licenses helps to establish quality and integrity in the mortgage industry, similar to other professions where occupational licensing is a standard practice to ensure competence and professionalism.